Kid to parent: “Homes were so much more affordable when you were young.”
Parent: “Um, nope.”
It’s a common misconception among today’s homebuyers that earlier generations had it easier when it came to buying a home. Prices were so much lower 25 years ago, right?
A new report by Black Knight says different. The industry analytics company recently released its Monthly Mortgage Monitor report, which includes a detailed analysis of home affordability nationwide. According to the report, the average monthly mortgage payment today consumes 21.6 percent of household income. That’s the highest it’s been in the last three years. However, over the past 25 years, the average mortgage payment has consumed 23.6 percent of household income for homeowners nationwide.
Objectively speaking, today’s homebuyers have roughly the same ability to be homeowners as their parents.
Todd Teta, Chief Product and Technology Officer at ATTOM Data, explains: “The typical median-priced home around the U.S. remains affordable to workers earning an average wage, despite prices that keep going through the roof. Super-low interests and rising pay continue to be the main reasons why.”